Lending based on GST data improves MSMEs’ access to credit: Vayana Network – The Financial Express

lipped from: https://www.financialexpress.com/economy/lending-based-on-gst-data-improves-msmes-access-to-credit-vayana-network/2220474/

Vayana has till date enabled $6 billion in trade finance for 300 supply chains in 25 different industries and processed 1.7 million transactions.

The smallest of MSMEs are being integrated into large SCF programmes run by the formal banking system, freeing them from the clutches of the high-cost informal market, he said.

Digital lending based on GST data can help close the credit gap of around $250 billion for SMEs and provide finance at lower rates to reduce their borrowing costs, according to Vayana Network, a supply chain financing platform.

Vayana has been able to lower the cost of financing for MSMEs on its platform by 200-600 basis points by partnering with banks and NBFCs which are looking at supply chain financing to build their MSME portfolios.

Ram Iyer, founder and CEO, Vayana Network, said MSMEs have been underserved by the formal banking system due to a trust deficit arising from the absence of credible data about them and the prohibitive cost of servicing large numbers of small MSMEs. Vayana addresses the trust deficit by using credible alternative data like GST and real-time trade data analytics to facilitate credit to MSMEs. The smallest of MSMEs are being integrated into large SCF programmes run by the formal banking system, freeing them from the clutches of the high-cost informal market, he said.

Iyer said the financing costs on their network are lower by 200 to 400 basis points for SMEs and up to 600 basis points in case of last-mile retail financing. The company will be targeting $10 billion in cumulative disbursement in 2022, and he expects the throughput to grow exponentially and double on the platform every year.

Vayana has till date enabled $6 billion in trade finance for 300 supply chains in 25 different industries and processed 1.7 million transactions.

Vayana and CRIF Solutions, a provider of credit information, analytics, scoring and decision solutions, recently launched a tech-based tool for assessment of MSMEs. The Good Business Score is based on ongoing GST data. Parthasarathi Patnaik, chief risk officer, Vayana Network, said a good score will help MSMEs improve their bargaining power as the score was based on GST filings, which are an authenticated and credible piece of data.

The product has generated interest from MSMEs, corporates, B2B supply chains and lenders, and the company expects to assess and score over 10,000 SMEs over the next quarter. Two public sector banks, two NBFCs and three corporates have already reached out to the company use the tool to assess their supply chain partners and customers.

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